The Supreme Court of the United States (SCOTUS) announced on February 20, 2026, that President Trump does not have authority under the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs. This announcement marks a significant legal and political moment in U.S. trade policy and creates a surge of opportunities for US importers financially impacted by the imposition of the tariffs since April last year.
Although this ruling invalidates a key pillar of the Trump administration’s tariff regime, the President was quick to install counter legislation to continue his policy of protectionist trade measures. Almost immediately, the President acted swiftly to reframe the tariff strategy through other statutory authorities, most notably Section 122 of the Trade Act of 1974.
Under Section 122, President Trump has imposed a temporary global import surcharge of 10% on most goods entering the U.S. Those listed in Annexes I and II of the Executive Order are excluded from these new measures and include pharmaceuticals, automotive products, and other goods already subject to separate Section 232 measures.
This surcharge is designed to be a broad substitute for the now-invalidated IEEPA tariffs and applies uniformly across nearly all trading partners for up to 150 days unless extended by Congress. The administration justifies this move as a response to “fundamental international payments problems,” a statutory phrase referring to imbalance in trade and payment flows under the 1974 Trade Act.
In basic terms, Section 122 allows the President to temporarily raise import costs for all trading partners to address economic issues, but it does not permit indefinite, permanent, or discriminatory tariffs without legislative approval. It is meant to be a short-term tool, distinct from emergency powers like IEEPA and different from longer-term trade authorities such as Section 232 (national security) or Section 301 (unfair trade practices).
In their statement on the 22 February, European officials made it clear that the United States must adhere to previously agreed tariff ceilings and commitments, stating “EU products must continue to benefit from the most competitive treatment, with no increases in tariffs beyond the clear and all-inclusive ceiling previously agreed” and requested full clarity on the situation.
In the UK, although no formal statement has been issued by the Prime Minister, senior UK Government spokespersons have reiterated that the UK expects its favourable trade relationship with the U.S. to continue despite the introduction of the Section 122 tariffs.
UK officials have engaged with U.S. counterparts to assess the impact on the UK-U.S. Economic Prosperity Deal (EPD). The uncertainty is especially acute for sectors like manufacturing, where U.S. tariff changes have direct cost implications for supply chains and competitiveness.
The central issue for both the UK and EU is not just whether trade deals are still valid in principle, but whether unpredictable tariff changes under Section 122 undermine the predictability and stability that exporters rely on. Trade agreements rest on binding commitments to tariff ceilings and reciprocal concessions; the current approach risks creating a climate where those commitments are seen as susceptible to abrupt reinterpretation or replacement. This volatility has already led to reduced confidence in markets, as reflected in recent financial volatility and uncertainty among European business leaders
